Question

1. Silver Lake Resort opened for business on July 1 with eight air-conditioned units. Its trial balance before adjustment on December 31 in as follows. (100 points)

Silver Lake Resort, Inc. Unadjusted Trial Balance December 31,2014
	Debit	Credit
Cash	$ 19,600
Supplies	3,300
Prepaid Insurance	6,000
Land	25,000
Buildings	125,000
Equipment	26,000
Accounts Payable		$6,500
Unearned Rent Revenue		7,400
Mortgage Payable		80,000
Share Capital-Ordinary		100,000
Dividends	5,000
Rent Revenue		80,000
Maintenance and Repairs Expense	3,600
Salaries and Wages Expense	51,000
Utilities Expense	9,400
	$273,900	$273,900

Other data for the adjustments (assuming no monthly adjustments before the fiscal year end):

Prepare adjusting journal entries for the following items.

1. Prepaid insurance of $6,000 was recorded on Sep 1, 2014 and the Insurance expires at the rate of $1,000 per month

2. A count of supplies on December 31 shows $300 on hand.

3. Depreciation for the period is $4,500 on buildings.

4. Unearned rent revenue of $4,000 out of previous balance $7,400 was now earned for services performed prior to December 31.

5. Salaries of $1,000 were unpaid at December 31.

6. Rentals of $4,000 were due from tenants at December 31 (use Accounts Receivables) [not yet received].

Prepare the adjusted trial balance, income statement, statement of retained earnings, and balance sheet. (you may use a separate sheet)

Answer 1

Silver Lake Resort, Inc.
Journal entries
Date	Account	Debit	Credit	Calculation
A	Insurance Expense	$        4,000		=1,000*4
	Prepaid Insurance		$        4,000
B	Supplies Expense	$        3,000		=3,300-300
	Supplies		$        3,000
C	Depreciation Expense	$        4,500
	Accumulated Depreciation-Buildings		$        4,500
D	Unearned Rent Revenue	$        4,000
	Rent Revenue		$        4,000
E	Salaries and Wages Expense	$        1,000
	Salaries and Wages Payable		$        1,000
F	Accounts Receivables	$        4,000
	Rent Revenue		$        4,000

Silver Lake Resort, Inc.	Unadjusted TB			Adjustments				Adjusted TB
Account Names	Debit	Credit		Debit	Credit	No.		Debit	Credit
Cash	19,600							19,600
Accounts Receivables				4,000		F		4,000
Supplies	3,300				3,000	B		300
Prepaid Insurance	6,000				4,000	A		2,000
Land	25,000							25,000
Buildings	125,000							125,000
Accumulated Depreciation-Buildings					4,500	C			4,500
Equipment	26,000							26,000
Accounts Payable		6,500							6,500
Unearned Rent Revenue		7,400		4,000		D			3,400
Salaries and Wages Payable					1,000	E			1,000
Mortgage Payable		80,000							80,000
Share Capital-Ordinary		100,000							100,000
Dividends	5,000							5,000
Rent Revenue		80,000			8,000	D/F			88,000
Maintenance and Repairs Expense	3,600							3,600
Salaries and Wages Expense	51,000			1,000		E		52,000
Utilities Expense	9,400							9,400
Insurance Expense				4,000		A		4,000
Supplies Expense				3,000		B		3,000
Depreciation Expense				4,500		C		4,500
Totals	273,900	273,900		20,500	20,500			283,400	283,400

Silver Lake Resort, Inc.
Income Statement
For the Year Ended Dec 31, 2014
Rent Revenue		88,000
Expenses
Maintenance and Repairs Expense	3,600
Salaries and Wages Expense	52,000
Utilities Expense	9,400
Insurance Expense	4,000
Supplies Expense	3,000
Depreciation Expense	4,500
Total Operating expenses		76,500
Net Income		11,500
Statement of Retained Earnings
For the Year Ended Dec 31, 2014
Retained Earnings, July 1, 2014		-
Net Income		11,500
Less Dividends		(5,000)
Retained Earnings, Dec 31, 2014		6,500

Silver Lake Resort, Inc.
Balance Sheet
As of Dec 31, 2014
Assets
Current Assets
Cash		19,600
Accounts Receivables		4,000
Supplies		300
Prepaid Insurance		2,000
Total Current Assets			25,900
Fixed Assets
Land		25,000
Buildings	125,000
Accumulated Depreciation-Buildings	(4,500)
Buildings, Net		120,500
Equipment		26,000
Total Fixed Assets			171,500
Total Assets			197,400
Liabilities & Stockholders Equity
Liabilities
Accounts Payable		6,500
Unearned Rent Revenue		3,400
Salaries and Wages Payable		1,000
Mortgage Payable		80,000
Total Liabilities			90,900
Stockholders Equity
Share Capital-Ordinary		100,000
Retained earnings		6,500
Total Stockholders Equity			106,500
Total Liabilities & Stockholders Equity			197,400